In the UK, over the past 30 years, the investment performance of farmland has been similar to many other assets, the main exception being residential property and equities (see Graph 5 in the gallery). However, more recently (the past 15 years) and again illustrated in Graph 5, farmland (let and farmed in-hand) has outperformed all assets except residential property.

Over the past three years, farming and forestry have topped the investment performance league in the UK. The stable returns from agricultural property during the past few years clearly show the recession proof nature of this asset and its value in inflationary environments.

A good risk

Additionally, the returns from agricultural investments have a weak correlation with mainstream investments, meaning agricultural property performs well when other assets show poor returns. This is a good argument for including agricultural property in a mixed portfolio, to reduce risk and boost overall portfolio performance.

The number of new farmland applicants registering with Savills each year has been relatively stable since 2006. Last year, however, new applicant registrations increased by over 45%, further evidence of the current interest in farmland as a strong performing asset. Anecdotal evidence suggests large farms were particularly in demand.

Taken from
Market Survey: Agricultural Land, 2011